Tax Tip: Capital Losses

Tax tip: (Did you know?) The IRS allows you to “carry forward” all of your capital losses, no matter how large.

If capital losses exceed capital gains, the filer is entitled to claim a deduction against the loss in the amount of $3,000 or the total net loss, whichever is less. When a net capital loss exceeds the $3,000 limit, it can be carried forward to future years.

In the following year, the loss carried forward would first be used to offset potential capital gains. If capital losses still exceed capital gains, the filer can claim up to $3,000 as a loss and continue doing so year over year until the net loss amount is reduced to zero.

There’s no limit on how many years you can use capital loss carryovers.

Additional information on capital gains and losses is available. We will help you determine when and how to best make use of them, and make sure they aren’t forgotten.

Ron Leger is a Massachusetts based CPA who specializes in the R&D Tax credit and taxes for businesses, individuals, trusts and tax exempt organizations. Contact us today!